RBA hike bets double: Australian Dollar shrugs off Iran war fears

• 0.44% gain takes AUD/USD to 0.7027 as its winning run continues.
• Despite restrictive policy, the inflation outlook is worsening, warns RBA's Hauser.
• 60% RBA hike probability marks a near-doubling ahead of Flash PMIs.

AUD/USD is trading at 0.7027. The pair has gained 0.44%, with the Australian Dollar advancing against the US Dollar for a fourth consecutive day. Market sentiment remains positive despite elevated Middle East tensions and recent news reports pointing to renewed hostilities.

Four-day AUD/USD advance: Hawkish RBA expectations eclipse geopolitical uncertainty

Following a largely flat close for US equities, the AI trade provided an after-hours lift as Meta and Tesla released earnings. Currency markets, however, saw the Greenback regain some ground. The recovery followed news that the US State Department is preparing an order for some personnel and family members at the US embassy in Saudi Arabia to depart.

While signalling readiness to give diplomacy another chance, Iran’s foreign minister warned that choosing war would leave the US facing an even greater strategic failure. Separately, Fars reported that multiple explosions had been heard in Sirik. Their source and nature remain unclear.

With no US economic releases on the calendar, traders are looking ahead to Thursday’s Initial Jobless Claims and the subsequent University of Michigan Consumer Sentiment release. Attention remains centred on next week’s Federal Reserve monetary policy decision, alongside the release of its preferred inflation measure, the Core Personal Consumption Expenditures (PCE) Price Index.

Australia’s calendar was also empty apart from hawkish remarks by Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser. He said that “inflation outlook appears worse than forecast, slightly above expectations,” adding that signs of deterioration persist in the inflation outlook even though monetary policy is working.

Nearly a 60% probability of a 25 basis point RBA rate increase to 4.85% was priced into money markets after Hauser spoke, according to Prime Terminal data. That compares with a 30% probability a day earlier.

Australia’s upcoming economic releases include S&P Global Flash PMIs, due on 22 October.

AUD/USD Price Forecast: 0.7077 resistance shapes technical outlook

Around 0.7024 on the daily chart, AUD/USD retains a bearish short-term bias. Spot remains below the triple simple moving average (SMA) cluster near 0.7077. Rising trend lines that previously offered support now form overhead resistance around 0.7086–0.7087 and 0.7111–0.7118. At 52.5, the Relative Strength Index (RSI) is slightly positive but still near neutral. This points to limited recovery momentum, insufficient so far to counter the pressure from those resistance levels.

The triple SMA around 0.7077 provides the first upside hurdle. Beyond it, former support trend lines converge densely at 0.7086–0.7087, followed by 0.7111–0.7118; a further horizontal barrier lies at 0.7198. For the downside, the immediate question is whether the current pivot zone near 0.7024 holds. The next significant structural support is an ascending trend line around 0.6946. Much further below, the longer-term descending trend-line anchor sits near 0.6246.

(The technical analysis of this story was written with the help of an AI tool. Know more.)